This chapter argues for important similarities between today's economic situation and the picture painted above by Milford Howard, a member of the US Senate at the time he wrote The American Plutocracy. This was the time, the 1880s and 1890s, when a combination of Manchester Liberalism—a logical extension of Ricardian economics—and Social Darwinism—promoted by the exceedingly influential UK philosopher Herbert Spencer—threatened completely to take over economic thought and policy on both sides of the Atlantic.

At the same time, the latter half of the nineteenth century was marred by financial crises and social unrest. The national cycles of boom and bust were not as globally synchronized as they later became, but they were frequent both in Europe and in the United States. Activist reformer Ida Tarbell probably exaggerated when she recalled that in the United States “the eighties dripped with blood,” but a growing gulf between a small and opulent group of bankers and industrialists produced social unrest and bloody labor struggles. The panic on 5 May 1893 triggered the worst financial crisis in the United States until then.

In economic theory, this increasing concentration of wealth and power that resulted from ostensibly “free market” activities caused a massive upheaval against classical economics in the late nineteenth century. In his three-volume Main Currents in Modern Economics (1971) Ben Seligman expressively entitles the first volume, dedicated to this period, “The Revolt against Formalism.” This revolt was spearheaded under different labels—historicism, institutionalism, empiricism, social policy, religion, socialism, ethics—but all these movements were in practice directed against the two-pronged movement of Manchester Liberalism (similar to today's neoliberalism) and Spencerian Darwinism. Ricardian formalism and social Darwinism decidedly lost this battle.